FTC's ‘reverse payment’ suit against Actavis Holdco not moot

An FTC action challenging a purported "reverse payment" settlement resolving patent infringement litigation over the testosterone replacement drug AndroGel was not mooted, even though defendant Actavis Holdco U.S., Inc. had become subject to an injunction, which prohibited most forms of reverse payment agreements, and generic AndroGel had already hit the market. Actavis Holdco, which—as a result of the company's acquisition by a third party—was bound by an injunction in an FTC suit against that third party, unsuccessfully moved for summary judgment on mootness grounds, arguing that there was no more relief to be granted to the FTC. The mootness doctrine inquired into a court’s authority to order a remedy, not the likelihood or appropriateness of that remedy under particular circumstances. As long as a court had the ability to fashion some form of meaningful relief, a case was not moot. The FTC had sought relief beyond what was contained in the earlier injunction, and the federal district court in Atlanta had the ability to grant meaningful relief to the agency (In re AndroGel Antitrust Litigation (No. II), June 2, 2017, Thrash, T.).

Like Actavis Holdco, Teva Pharmaceutical Industries Ltd., and its wholly-owned subsidiary Teva Pharmaceuticals USA, Inc. faced an FTC action over alleged pay-for-delay conduct in the generic drug market. The FTC brought suit over that agreement, and the parties settled. As part of the settlement, Teva agreed to be subject to a permanent injunction that prohibits most forms of reverse payment agreements.

In August 2016, during the pendency of this litigation, Teva acquired the movant, Actavis Holdco, from Allergan plc, Actavis’ corporate parent. Allergan reassigned liability for this litigation to Actavis Holdco. At the same time, Actavis Holdco became subject to the injunction binding Teva.

Actavis Holdco argued that because it was subject to the Teva injunction and because a generic version of AndroGel had already entered the market, there was no more relief to be granted to the FTC. Actavis Holdco moved for summary judgment on the grounds that the action was moot.

Federal courts have broad authority to order equitable relief in antitrust cases, the court explained. The goal of an equitable antitrust suit is to prevent anticompetitive activity in the future, and the courts have a wide range of means at their disposal to do so.

The federal district court could potentially grant relief beyond the Teva injunction. The FTC had identified three potential types of such relief: (1) a ban on “no authorized generic,” or “no-AG agreements,” which are essentially promises by the brand manufacturer to refrain from marketing a generic version of its own drug, thereby reducing competition with the generic manufacturer; (2) an advance notice provision that would require Actavis Holdco to seek the FTC’s approval prior to entering into patent litigation settlements that involve certain forms of payment agreements, and (3) an extended injunction period beyond the expiration of the Teva injunction. None of these remedies were redundant, and all three were well within the court’s authority to grant, it was decided.

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